                                 CODE OF VIRGINIA

DEFINITIONS (§ 56-605)

As used in this chapter:
		&#8220;Eligible infrastructure&#8221; means storage, compressed natural gas,
liquefied natural gas, transmission and distribution facilities to be used in
the delivery of natural gas, or supplemental or substitute forms of gas sources
by a natural gas utility.
		&#8220;Eligible infrastructure development costs&#8221; or &#8220;EIDC&#8221;
for a qualifying project shall be comprised of the investment in eligible
infrastructure and the following:

1. Return on the investment. In calculating the return on investment, the
Commission shall use the natural gas utility&#8217;s weighted average cost of
capital, including the cost of debt and equity, based on its regulatory capital
structure used in determining the natural gas utility&#8217;s base rates in
effect during the construction period of the eligible infrastructure development
project. The investment will be multiplied by the weighted average cost of
capital to determine the return on investment;

2. A revenue conversion factor. Such factor, including income taxes and an
allowance for bad debt expense, shall be applied to the required operating
income resulting from the eligible infrastructure development costs;

3. Operating and maintenance expense. The amount of operating and maintenance
expense utilized in the utility&#8217;s calculations of justifiable new business
plant investment shall be consistent with the natural gas utility&#8217;s
standard line extension tariff provisions;

4. Depreciation. In calculating depreciation, the Commission shall use the
natural gas utility&#8217;s currently approved depreciation rates applicable to
each general plant account; and

5. Property taxes.
			The foregoing shall be reduced by a base non-gas revenue credit comprised of
the non-gas revenue received by the natural gas utility from providing sales or
transportation service, or both, to (i) the customer occupying the qualifying
project and (ii) any other customer of the natural gas utility served directly
from the subject eligible infrastructure that initiates natural gas service
before the Commission issues an order establishing or confirming customer rates
in a rate case using the cost of service methodology set forth in &#xA7;
56-235.2 or a performance-based regulation plan authorized by &#xA7; 56-235.6
which rates include recovery of costs deferred under this chapter.
			&#8220;Investment&#8221; means costs incurred to deploy eligible
infrastructure including planning, development, and construction costs and, if
applicable, an allowance for funds used during construction. In calculating the
allowance for funds used during construction, the Commission shall use the
natural gas utility&#8217;s regulatory capital structure as determined in
subdivision 1 of the definition of &#8220;eligible infrastructure development
costs.&#8221;
			&#8220;Natural gas utility&#8221; means an investor-owned public service
company engaged in the business of furnishing natural gas service to the public.
			&#8220;Person&#8221; means natural persons, firms, associations,
cooperatives, corporations, limited liability companies, business trusts,
partnerships, and limited liability partnerships.
			&#8220;Qualifying project&#8221; means an economic development project
requiring natural gas service as to which the natural gas utility has made a
good faith determination that the following criteria are satisfied:

1. The location of the proposed project is in an area where adequate natural gas
infrastructure is not available;

2. The eligible infrastructure will provide opportunities for increased natural
gas usage and economic development benefits in the area to be directly served by
the subject eligible infrastructure in addition to those provided by the subject
project;

3. Either (i) the person proposing to develop the project or the person that
will occupy the proposed project shall provide, prior to the initiation of
service, a binding commitment, in the form of a service agreement, precedent
agreement, memorandum of understanding, or otherwise, to the natural gas utility
regarding capacity needed for a period of at least five years from the date gas
is made available, provided that such commitment covers a level of service no
less than 50 percent of the capacity of the facilities proposed to be
constructed by the natural gas utility to serve such project or (ii) the natural
gas utility receives a financial guaranty from the Commonwealth or an agency or
subdivision thereof, the governing body of the locality in which the project is
located or an agency or subdivision thereof, or from a developer or any other
person other than the proposed occupant of the project, in the amount of at
least 50 percent of the estimated investment to be made by the natural gas
utility in the proposed project, and otherwise in form and substance
satisfactory to the natural gas utility. Without limiting the generality of the
foregoing, such financial guaranty may be in the form of a letter of credit
issued by a bank or other lending institution licensed to do business in the
Commonwealth. Any financial guaranty provided to the natural gas utility shall
be released upon the receipt by the natural gas utility of a binding commitment
meeting the requirements of clause (i) from a person proposing to develop the
project or a person that will occupy the project;

4. The natural gas utility has reasonably and in good faith negotiated with the
developer of the project or the person that will occupy the proposed project in
an attempt to reach agreement on a commitment for the entire aid to construction
otherwise required to cover the cost of the necessary eligible infrastructure;
and

5. The projected non-gas revenues from the proposed project will not be
sufficient to cover the cost of service associated with the necessary eligible
infrastructure after accounting for any aid to construction contributed by the
developer of the project or the person that will occupy the proposed project.
			A qualifying project may consist of multiple persons proposed to be served
through common eligible infrastructure, provided those persons each satisfy the
requirement of a service commitment for at least five years from the date gas is
made available and collectively they satisfy the capacity commitment of at least
50 percent. For purposes of this chapter and notwithstanding the foregoing, a
qualifying project shall not include an economic development project applicable
to customers to be served under a special rate or contract approved by the
Commission pursuant to the provisions of &#xA7; 56-235.6 or industrial customers
to be provided service pursuant to a negotiated rate permitted by a tariff
approved by the Commission.

HISTORY: 2012, cc. 51, 202.